This is IDC’s second quarter of ranking HCI technology providers two ways: by the brand of the hyperconverged product and by the owner of the software providing the core hyperconverged capabilities. While Dell led the branded-box category, VMware for the second quarter in a row is the No. 1 HCI software vendor.
As with the fourth quarter, Nutanix ranks No. 2 in both HCI categories. Hewlett Packard Enterprise (HPE) and Cisco remain statistically tied for the quarter, which means that there is a difference of 1 percent or less in the revenue share of those two vendors.
By the Numbers
Here’s how the numbers shake down.
Worldwide converged systems market revenue increased 19.6 percent year over year to $3.2 billion during the first quarter of 2018, according to IDC. The analyst group’s market view covers three segments: certified reference systems and integrated infrastructure; integrated platforms; and hyperconverged systems.
The certified reference systems and integrated infrastructure market generated $1.3 billion in revenue during the first quarter. This represents a 0.9 percent year-over-year decline and 41.7 percent of total converged systems revenue.
Dell EMC was the largest supplier in this market segment with $641.3 million in sales and a 48 percent market share. Cisco and NetApp generated $462 million in sales from their joint FlexPod converged system, representing the second largest share of 34.6 percent. HPE brought in $105.3 million in sales, or a 7.9 percent market share.
Explosive HCI Growth
The hyperconverged systems segment, however, saw another explosive growth quarter. Revenue from the sales of these systems grew 76.3 percent year over year during the first quarter, totaling $1.2 billion worth of sales. This amounted to 38.3 percent of the total converged systems market.
In terms of branded HCI products, Dell EMC topped the chart with $363 million in revenue and a 29.6 percent share. This represents year-over-year growth of 142 percent, compared to the overall industry segment growth rate of 76.3 percent.
Nutanix generated $273 million in branded HCI revenue with the second largest share (22.2 percent). HPE and Cisco made $61 million and $59.9 million in revenue, or 5 percent and 4.9 percent market share, respectively.
For the software-only segment of the market, systems running VMware’s hyperconverged software represented $456.3 million in first-quarter vendor revenue, or 37.2 percent of the total market. Systems running Nutanix’s software totaled $398.7 million in vendor revenue, or 32.5 percent of the total market. HPE and Cisco tied in this category with $61.3 million (5 percent) and $59.9 (4.9 percent), respectively.
These amounts represent all software and hardware regardless of how it was ultimately branded.
And finally, integrated platforms sales increased 0.9 percent year over year during the first quarter of 2018, generating $641.2 million worth of sales. This amounted to 20 percent of the total converged systems market value. Oracle was the top-ranked supplier of integrated platforms, generating revenues of $356.8 million and capturing a 55.6 percent share of the market segment.
HCI Software Plays
There have been some noteworthy HCI software moves over the last few months that could shake up future rankings, however.
In June, HPE closed its acquisition of SDN fabric vendor Plexxi and said it’s integrating Plexxi’s technology into its HCI and composable products. We’ll be waiting to see if this is enough to break the HPE-Cisco tie — or even steal market share from Nutanix, VMware, and Dell EMC.
Additionally, Nutanix in May added an SDN tool to its HCI and cloud software stack. The SDN tool uses real-time application visibility and technology Nutanix acquired from Netsil in March. Nutanix is also transitioning to a software-centric business model, which it is hoping will propel its HCI software sales ahead of rival VMware.
We also expect to hear about new HCI capabilities from Dell EMC and VMware’s joint systems at VMware’s annual conference in August.
And in a recent conversation with SDxCentral, Pivot3 CEO Ron Nash bragged that his company’s HCI technology puts it at the top of the potential acquisition list. Pivot3 would make an attractive M&A target for an infrastructure vendor looking to snag a slice of this lucrative data center technology market.
The one thing that seems certain is that the sector’s growth isn’t likely to slow down anytime soon. Whether or not Dell Technologies’ brands— Dell EMC and VMware — can maintain their market dominance in this fiercely competitive field, however, will be an interesting contest to watch.